Germany Fines Volkswagen $1.2 Billion Over Diesel Scandal

Diess Volkswagen's new CEO attends the Volkswagen Group's annual general meeting in Berlin

Volkswagen has been handed a €1 billion (£880m) fine by Germany's Brunswick public prosecutor for cheating diesel emissions tests. Then, the automaker agreed to pay $4.3 billion to resolve both civil and criminal penalties relating to the installation of illegal software that allows its vehicles to circumvent US emission tests. "Volkswagen AG, by doing so, admits its responsibility for the diesel crisis and considers this as a further major step towards the latter being overcome", the statement noted.

The fine comes two days after prosecutors in Munich widened their emissions cheating probe into Volkswagen's luxury carmaker Audi, to include the brand's chief executive Rupert Stadler among the suspects accused of fraud and false advertising.

This follows the country's recall of 238,000 Daimler vehicles earlier this week as part of a larger, Europe-wide recall of 774,000 vehicles, and the German transport minister also threatened to sue Daimler for 3.75 billion euros should it be found to have used defeat devices in its diesel vehicles. Later, researchers were able to find the exact code that suppressed the emissions control system on 2007-2015 diesel Volkswagens, Audis, and Porsches from Volkswagen Group.

VW is far from being out of the woods.

"We must plan for interruptions to production in the third quarter", VW chief executive Herbert Diess told workers.

Hausfeld represents aggrieved VW owners and shareholders on both sides of the Atlantic.

The German vehicle maker announced the fine on Wednesday evening, saying it had agreed the "administrative penalty" after an investigation by the public prosecutor in Braunschweig, the city close to the company's Wolfsburg headquarters. "Further steps are necessary to gradually restore trust again in the company and the auto industry".

Finance chief Frank Witter will update investors on August 1 on the implications of the fine for the carmaker's cash position, alongside its second-quarter results, VW said.

The one billion euro fine was not accounted for in Volkswagen's 25.8 billion euro provision for Dieselgate-related fines, payouts, fixes and penalties, and would impact upon the Wolfsburg carmaker's earnings, analysts at Evercore ISI said.

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